SEC sends crypto classification proposal to White House

• The US Securities and Exchange Commission (SEC) has submitted a proposal to the White House's Office of Management and Budget to redefine the classification of crypto assets under federal law.
• Under the leadership of Chair Paul Atkins, the agency plans to exclude digital commodities, digital tools, digital collectibles (NFTs), and stablecoins from being treated as securities.
• This regulatory shift is intended to serve as an interim framework until Congress passes comprehensive market structure legislation, such as the CLARITY Act.

Submission for White House Review

The SEC has officially forwarded a plan to reinterpret federal securities laws regarding digital assets to the White House. According to records from the US General Services Administration, two proposed rules were sent on Friday and are currently marked as pending review. This move could fundamentally alter how the agency manages enforcement and regulation within the cryptocurrency sector.

A New Taxonomy for Digital Assets

Chair Paul Atkins issued a notice last week outlining a "coherent token taxonomy" designed to provide clarity to the industry. The interpretation specifies that four distinct categories of assets would fall outside the SEC's purview as securities:

• Digital commodities
• Digital tools
• Digital collectibles, including non-fungible tokens (NFTs)
• Stablecoins

By establishing these boundaries, the agency seeks to clarify when a digital asset constitutes a "non-security" versus an investment contract. This development follows a memorandum of understanding signed earlier this month between the SEC and the Commodity Futures Trading Commission (CFTC), coordinating their oversight roles.

Legislative Context and Roadblocks

While the SEC’s new interpretation provides a temporary bridge, permanent regulation remains dependent on Congressional action. Reports indicate that White House representatives and lawmakers recently reached a deal regarding stablecoin yield, which may help the CLARITY Act progress through the Senate Banking Committee.

However, the legislative path remains uncertain. The committee postponed the bill's markup in January after Coinbase CEO Brian Armstrong expressed that the exchange could not support the current draft. Additionally, Senate Majority Leader John Thune has indicated that other legislative priorities, such as the SAVE America Act, may take precedence over bipartisan market structure bills in the near term.